Village cuts guidance for 2010-11

Village’s Australian cinema business has been hurt by a lack of blockbuster movies this year.
Photo: Tamara Voninski

by
Neil Shoebridge

Wet weather in Queensland and a weak slate of movies from Hollywood have forced
Village Roadshow
to chop its forecast 2010-11 net profit.

The theme park, cinema and movie production company predicted it would generate a full-year net profit before one-off items and excluding businesses sold – that is, Sydney Attractions Group and Austereo Group – of between $27 million and $32 million, down from its previous guidance of $35 million.

Village’s theme parks on the Gold Coast were affected by 87 days of rain during the December half and the Queensland floods in January.

“The rain has continued since then; not just rain, but extreme rain," Village chief executive
Graham Burke
said yesterday. “We’re hoping the weather will improve from now on, but who knows."

Mr Burke said Village’s Australian cinema business had been hurt by a lack of blockbuster movies this year.

Other cinema chains have also reporting sluggish box-office takings, including Amalgamated Holdings and Hoyts. The latter’s owner, private equity firm Pacific Equity Partners, has shelved an initial public offering until the cinema market picks up.

“The cinema business was bad in March and April," Mr Burke said.

“Revenue improved around Easter in late April, thanks to new releases such as Thor and Fast Five. There are some strong new releases this month, including The Hangover 2 and Pirates of the Caribbean 4, and the line-up for June is looking strong."

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Village’s reported net profit would be affected by an unspecified one-off cost related to the head-office restructuring announced in late March, which was expected to cut its corporate costs by about $20 million a year.

An annual reduction of more than $3 million in the remuneration of Village’s three most senior executives – Mr Burke, executive chairman Robert Kirby and executive deputy chairman John Kirby – was part of the promised cost cutting.

The trio own Village Roadshow Corporation, which is the listed Village’s largest shareholder with a 51 per cent stake.

The combination remuneration of Mr Burke and the Kirby brothers in 2009-10 was $11.5 million, including base salaries of just under $1.9 million and bonuses of $1.6 million each. (The role of executive chairman swaps between Robert and John Kirby every four years.)

Village revealed the three executives’ new remuneration yesterday.

Robert and John Kirby’s new base salaries are $2.25 million and $1.6 million a year respectively, with no bonuses. Mr Burke’s base salary is also $2.25 million and he can earn a maximum bonus of $1 million. The trio’s total potential remuneration is now $7.1 million.